Quarterly Economic Summary and Forecast

Provided by Bank of Estes Park August 1, 2017

By Dr. John W. Green, Economist - For the Trail Gazette

Posted:
08/02/2017 10:01:54 AM MDT

My economic summary on May 1 showed the Estes Park economy doing very well. Since then, economic activity has grown even stronger, led by real estate sales. The March real estate sales value was by far the highest in the history of the region and April was the only month in which the sales value was lower than last year. If April had been only slightly positive versus 2016, real estate sales value in the first half of the year would have doubled over 2016.

Total real estate sales value doesn't all flow directly into the local economy but it does indirectly affect many sectors of the economy. Strong demand for local real estate drives prices up, making existing homeowners feel wealthier and stimulates their spending. It also stimulates more home building and, thus, demand for labor (wages), lumber, cement, landscaping, furniture, electricity, city services, etc. If the 2nd half of 2017 is as strong as the 1st half, 2017 will be a BOOM year in the real estate sector in Estes Park.

Advertisement

The Town of Estes Park has initiated a great service to the community called the Economic Dashboard. It can be found at this website: https://www.colorado.gov/townofestespark/dashboard. Let me summarize the June 2017 economic conditions. Highway 34 traffic is down, as expected, but Highway 36 traffic more than made up for the loss. Highway 34 is now open so we expect traffic to increase on that highway and decrease somewhat on Highway 36 as normalcy returns to the two main entrances to Estes Park. Retail sales tax collections were up in May and for the year-to-date. Park visitation was up in June and more than 2% for the year. Visits to the Estes Park Visitor Center were down substantially for June and year-to-date, probably indicating fewer out-of-region visitors. New business licenses issued were down in June and for the year-to-date. Building permits issued were up VERY strongly for both the month of June and year-to-date. In general, this reflects a positive business climate supporting the Estes Park economy, although less positive than three months ago.

This dashboard picture agrees with my more regional economic assessment of Larimer County and Estes Park. The strongest sector in the Larimer County economy is employment growth. Monthly growth in employment has been well over five percent for several months in 2017, a pace which cannot be sustained. Five percent growth means employment would double in 15 years; the current doubling is taking 30 years. Unemployment is very low and the labor market is very tight. Multi-unit construction activity has picked back up and single family housing construction is still strong.

My Estes Park Economic Indicator was very strong from November 2016 through April 2017, nearing 20% growth in nearly every month. However, there was a drastic slowing in May as the Indicator dropped to nearly zero. Real estate activity is giving a substantial boost to the economy of Estes Park but it is only one of seven economic indicators I use. The forecast is still for growth around 10% for the rest of 2017 but May data introduces an element of uncertainty in the forecast.

The cloud still hanging over the national and local economies is related to the uncertainty of what actual policy changes and/or directions to expect from the Trump Administration and Republican-controlled Congress. The fate of massive infrastructure spending, healthcare changes, taxes, and potential trade wars will all influence the growth rate of our intertwined economies in the rest of 2017 and 2018. Recent steel import tariff statements have prompted retaliatory statements focused on soybean exports from the U.S. Such moves would increase steel product prices in the U.S. and lower farm product prices. Employment in steel producing regions would benefit at the expense of the financial health of the farm sector. There are always winners and losers in a trade war as economic efficiency suffers.

Please Note: This is a very brief summary of a comprehensive, specialized, quarterly economic summary and forecast report that Bank of Estes Park utilizes internally, addressing the national, state, county, and local economies. The complete version is available upon request to bank clients of Bank of Estes Park, for private, individual use, without reproduction or distribution. This brief summary is being made available as a service to the local Estes Park community. For questions or comments, please call Scott Applegate, Chief Credit Officer, at 970-235-7027.

Article Comments

We reserve the right to remove any comment that violates our ground rules, is spammy, NSFW, defamatory, rude, reckless to the community, etc.

We expect everyone to be respectful of other commenters. It's fine to have differences of opinion, but there's no need to act like a jerk.

Use your own words (don't copy and paste from elsewhere), be honest and don't pretend to be someone (or something) you're not.

Our commenting section is self-policing, so if you see a comment that violates our ground rules, flag it (mouse over to the far right of the commenter's name until you see the flag symbol and click that), then we'll review it.